Primewest (Cottesloe Central) Pty Ltd v Office Leasing Australia Pty Ltd - [2017] WADC 148

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: PRIMEWEST (COTTESLOE CENTRAL) PTY LTD -v- OFFICE LEASING AUSTRALIA PTY LTD [2017] WADC 148

CORAM: DEPUTY REGISTRAR HEWITT

HEARD: 10 NOVEMBER 2017

DELIVERED : 23 NOVEMBER 2017

FILE NO/S: CIV 1991 of 2017

BETWEEN: PRIMEWEST (COTTESLOE CENTRAL) PTY LTD
Plaintiff
AND
OFFICE LEASING AUSTRALIA PTY LTD
First Defendant
AUZCORP OFFICE LEASING SERVICES PTY LTD
Second Defendant

Catchwords:

Practice and procedure - Summary judgment application - Turns on its own facts

Legislation:

Competition and Consumer Act 2010 (Cth) Schedule 2 The Australian Consumer Law

Result:

Judgment for the plaintiffs

Representation:

Counsel:

Plaintiff:     Mr N W Kalmund
First Defendant             :     Mr M L Bennett
Second Defendant         :     Mr M L Bennett

Solicitors:

Plaintiff:     Hotchkin Hanly
First Defendant             :     Bennett & Co
Second Defendant         :     Bennett & Co

Case(s) referred to in judgment(s):

DEPUTY REGISTRAR HEWITT: The writ in this matter was filed on 8 June 2017 followed by a chambers summons for a summary judgment and simultaneously a statement of claim on 18 August 2017. An objection was raised in that a summary judgment application should not be made until an appearance is filed and a statement of claim served. That issue was raised and determined at an earlier hearing and I ruled that the failure to precisely comply with the terms of the order could be treated as an irregularity and as a consequence I adjourned the summary judgment application for determination. A transcript of my oral reasons for decision was provided to the parties.
The matter next came before the court on 10 November 2017 and once again an objection to the regularity of the proceedings was raised. That objection concerned the fact that it was argued that the actions against the first defendant and the second defendant were discrete actions and should not have been joined together in the one writ. The first defendant and second defendants are separate companies. Each ended a lease with the plaintiff for different areas of a building and executed different lease documents in respect of those leases, even though many of the terms within those documents were standard. On the writ as presented to the court there was no common issue which would justify them both being named as defendants in the one writ. I make those comments notwithstanding the fact that the negotiations concerning the leases were conducted by a director who held a directorship in each of the companies. That to my mind is not a relevant factor. The causes of action were clearly separate and the writ and statement of claim made that perfectly clear. I therefore conclude that the writ was in that respect irregular but I now pause to consider the position as it now exists. The defence which is offered by the defendants for the most part revolves around the provisions of the Australian Consumer Law where it is said that the plaintiff, through its agent Colliers, engaged in misleading and deceptive conduct such that each of the leases is liable to be declared void ab initio under the provisions of the Australian Consumer Law and damages awarded to each incurred as a consequence of that conduct.
It would be possible to require the plaintiff to take remedial steps to correct the irregularity which has been created. To do so would probably require the plaintiff to discontinue against one or the other of the defendants, to commence a fresh writ and serve that writ and plead that writ and then having received the defence which would no doubt reiterate that which is contained in the present defence apply to have the actions heard together by virtue of the common issues which would be raised by the defence.
One of the principles which govern the operation of this court is to ensure that costs are not wasted and delay is not incurred. Were I to impose upon the plaintiff the requirement to undergo the process I have just described I have no doubt that significant costs would be incurred and I have no doubt that significant time would be absorbed. That to my mind runs counter to the principles upon which this court is required to operate and in that respect I refer to O 1 r 4A of the Rules of the Supreme Court 1971 which is couched in the following terms:
The practice, procedure and interlocutory processes of the court shall have as their goal the elimination of any lapse of time from the date of initiation of proceedings to the final determination beyond that reasonably required for interlocutory activities essential to the fair and just determination of the issues bona fide in contention between the parties and the preparation of the case for trial.
It seems to me that to impose a requirement on the plaintiff such as I have earlier outlined would run completely counter to those principles and as a consequence, and because all the necessary materials have been presented to me, I propose to determine the summary judgment application on the materials which have been put before me. In doing so I take the view that summary judgment should only be granted in the clearest of cases where there is no real issue to be tried.
Save in one respect for one lease there is no serious contention that the monies claimed to be outstanding under the leases are unpaid. One aspect which does remain contentious and with which I will deal at a later stage is whether or not a portion of one of the leased premises was surrendered thus relieving the tenant of that premises the obligation to pay a portion of the rent.
Turning aside from that aspect of the matter I now look at the defence which is offered by the defendants. That defence is based upon the proposition that certain representations were made by Colliers, the agent of the plaintiff, which were misleading and deceptive, induced each defendant to enter their respective leases, and render those leases liable to be declared void ab initio under the provisions of s 243 of the Australian Consumer Law. The starting point to analyse this portion of the proposed defence involves the affidavit of Mark Anthony Medlock sworn in opposition to the application and dated 26 September 2017. The critical material is contained in par 5 of the affidavit which is in the following terms:
5.I am informed by Mr Haniff Kassim, a director of Auzcorp Pty Ltd, the shareholder of both Office Leasing and Auzcorp and verily believe it to be true that:
5.1at all times, Colliers as agents of Primewest represented to Office Leasing and Auzcorp that Primewest had intentions to redevelop the Centre, as per the development clause contained in the lease documents, and was not keen to invest any money in any infrastructure improvements:
5.1.1Office Leasing and Auzcorp were always informed of the re‑development clause and that Primewest would develop the eastern part of the first floor of the Centre (except the eastern part already occupied by some retail tenants) as a commercial hub exclusively set aside for commercial tenants with appropriate commercial facilities (Commercial Hub);
5.1.2the area within the Commercial Hub would not be leased to businesses involved in the sale of goods or services by retail;
5.1.3Primewest, like any other Landlord under the Tenancy Act under Western Australia and Australia, would properly repair, maintain and develop the first floor area into a Commercial Hub;
(Representations).
The first point to note is that the information relied upon is hearsay from one Haniff Kassim who is or was at the relevant time a director and shareholder of the second defendant and a shareholder of both defendants. Although hearsay evidence admissible in an application such as this, it does compound what I perceive to be the imprecision of the allegations. The representation is said to be that Colliers as agents of Primewest, represented to Office Leasing and Auzcorp that Primewest had intentions to redevelop the centre as per the development clause contained in the lease documents and was not keen to invest any money in any infrastructure or improvements. There was no information provided as to when, where and by whom such representations were made nor the exact substance of what was said, nor is it disclosed when this information came to the attention of the deponent who executed each lease. No specifics of the nature of the redevelopment are alleged to have been given other than the fact that the eastern part of the first floor with the exception of some part already occupied by some retail tenants would be developed as a commercial hub exclusively set aside for commercial tenants with appropriate commercial facilities and that area would not be used by businesses involved in the sale of goods or services by retail. There was also an allegation that the premises would be properly maintained and so forth. Exhibits to the affidavit refer to emails from one David Swartz, an officer of the plaintiff company apparently relied upon to confirm the substance of the allegations of misrepresentation. The first of the emails is dated 18 September 2012 and I am unable to discern anything within that email which is relevant to whether or not representations were made in the terms which are described in the affidavit. The second of the emails dated 21 September 2012 does refer to a redevelopment clause which would apply to both leases and which was said 'not to be enacted prior to November 2017'. That is consistent with each lease which contained a provision that the redevelopment clause would not be exercised prior to November 2017. On a perusal the redevelopment clause referred to confers a right upon the landlord to terminate the leases if it intended to undertake redevelopment which would encompass the areas occupied by the defendants under the terms of their lease, subject in some circumstances to compensation for fitting out costs and loss of goodwill. The emails establish, as does the lease that the plaintiff had some, at that stage, inchoate plans to redevelop the premises but the manner and extent of that redevelopment, was then undetermined. Certainly nothing in those emails supports the specifics which are contended for by the defendants.
The alleged misrepresentations concerned the manner in which the proposed commercial hub on the first floor of the premises would be used specifically, exclusively for commercial tenants with appropriate commercial facilities and not businesses involved in the sale of goods or services by retail. Notably it would appear that there were already retail tenants on the first floor in the general area that the hub was to occupy there was no suggestion it was represented that those retail premises would not continue.
The defendants complain that at around about 2015 the plaintiff leased some areas of the ground floor of the centre to various tenants namely a massage parlour, a liquor store, sushi bar and a martial arts store. The first point to note is that the sworn testimony of the deponent of the affidavit identifies these as being on the ground floor whereas the representation upon which the defendants rely were in relation to the first floor. Nothing is advanced it would in my opinion amount to a breach of the representations, if they were made, in the manner propounded by the director of the defendants.
A suggestion was made during argument that the martial arts school must have been on the first floor since it is described as being opposite the entrance to one of the tenancies occupied by the defendants. That argument is in contradiction to the sworn testimony provided by the director that the relevant areas were on the ground floor. In summary therefore I analyse the defence based upon the misleading and deceptive conduct said to have been engaged in by the plaintiff as firstly being very indefinitely expressed lacking as it does many of the particulars one would expect, lacking any documentation providing any worthwhile support for the propositions, lacking any documentation to suggest that the defendants regarded the acts of the plaintiff as a breach of the representations which it made and finally that the activities which are being relied upon by the defendants as breaching the misrepresentations do not do so because they were activities undertaken on the ground floor and the representations related to what was to happen on the first floor. Insofar as the defendants rely upon the provisions of the Australian Consumer Law to protect them from the claim from the plaintiff in my view the evidence and arguments advanced do not do so.
The next point to consider is whether or not there was a surrender of part of the lease of one of the tenancies such that the amount claimed to be due is inflated. On that score there is a chain of email correspondence concerning the surrender of an area of the tenancy of unit 39 of the plaintiff's premises the reduction being something in the order of 107 sqm and a proposed reduction in rental accordingly. Proposals in those terms were contained in a letter dated 11 December 2015 from the plaintiff to Office Leasing Australia Pty Ltd but were expressed to be subject to final lessor board approval and subject to the execution of a deed of variation by both the lessee and the lessor and the payment of the costs of that deed by the lessor. The letter contained provisions for the first defendant to signify its agreement with the proposed terms by signing, dating and so forth the letter to which I have referred. There followed further discussion between the parties and a further letter dated 16 December 2015 proposing variations and extensions to the tenancy of unit 39A which was occupied by the second defendant and a further letter of the same date concerning unit 39. There is no suggestion that the letters were ever endorsed with the consent of the relevant defendant. In response to that on 23 December 2015 the defendants responded by suggesting a licensed surveyor (at the plaintiff's cost) to measure up the premises after intertenancy walls had been installed. What does appear to be clear however is that no formal document as contemplated by the correspondence was ever drawn up and the partitioning of the relevant area did not proceed.
In the absence of any evidence that an enforceable contract was entered between the parties surrendering a portion of the tenanted premises, and that the relevant defendant ceased to occupy that portion of the premises, I am unable to see that there is an argument which could properly impugn the plaintiff's claim for the full amount of the rental and other costs which it claims to be due from these defendants. Accordingly I am of the view that a judgment in terms of that sought by the plaintiff should be entered. In doing so I am cognisant of the fact that the terms of the lease provide that set‑offs, counterclaims and the like do not derogate from the obligation to pay the rent and other outgoings.
There are however issues raised by the defendant which are capable of being pursued and which may lead to an award of damages to the defendant for breach of the lease because of the failure of the plaintiff to properly carry out its obligations under the terms of the leases. The defendants shall have leave to pursue those matters but judgment shall be entered for the plaintiff in the amount of its claim. On the questions of costs, I await argument from the parties on the delivery of this decision. I acknowledge that Mr Bennett who argued this matter before me will not be available when this decision is to be delivered and would be amenable to adjourning to a later date when he is available to argue the costs issue.